In 2003, Colorado legislators enacted CDARA in response to costly construction defect actions filed against construction professionals. As a result, CDARA now governs civil actions against construction professionals for damages, indemnity, or contribution in connection with alleged construction defects. A “construction professional” includes architects, engineers, contractors, subcontractors, builders, builder vendors, developers, and prior commercial property owners.

CDARA is a controversial, complicated, and nuanced statute with strict deadlines and requirements that must be carefully analyzed on a case-by-case basis. For this reason, it is important to seek legal counsel early in the dispute process to protect your rights and minimize your company’s exposure to damages. Here are five key things to know about construction defect claims and CDARA:

Before filing a construction defect claim against a construction professional, a claimant must comply with CDARA’s Notice of Claim procedure. A Notice of Claim is a written notice sent by a claimant to a construction professional identifying and describing the defect. A claimant must comply with strict deadlines for sending the Notice of Claim, include specific information in the Notice of Claim, and send or deliver the Notice of Claim in a set manner. Different deadlines apply to commercial property than to residential property. [1]

Upon receipt of a Notice of Claim, a construction professional has the right to inspect the claimant’s property and alleged defects. After inspecting the property, the construction professional may make an offer to settle the claim or repair the defect(s), but it is not required to do so. There are strict deadlines for completing the inspection, making an offer of settlement or offer to remedy the defect, and for the claimant to accept or reject the offer. Different deadlines apply to commercial property than to residential property. [2] If no offer is made by the construction professional or if the claimant rejects the offer, the claimant may bring an action against the construction professional for the construction defect claim described in the Notice of Claim (unless the parties are contractually bound to follow a mediation procedure first, in which case the mediation procedure must also be satisfied prior to bringing an action). Failure to respond to the Notice of Claim, comply with the terms of an accepted settlement offer, or remedy the defects, may expose a construction professional to treble damages if the construction professional violates the Colorado Consumer Protection Act (CCPA).

Construction defect claims are subject to a “statute of repose.” A statute of repose limits the time in which a claimant can bring a construction defect claim against a construction professional. Subject to limited exceptions, a construction defect claim must be filed no later than six years after the substantial completion of the improvement. If the cause of action arises during the fifth or sixth year after substantial completion of the improvement, the claim must be brought within two years after the date when the cause of action arises. [3]

CDARA limits the amount of damages that a claimant may recover. Typically, a construction professional cannot be liable for more than actual damages, unless the construction professional also violates the CCPA and meets other requirements. Notwithstanding any provision of the law, the aggregate amount of treble damages and attorney fees awarded to a claimant cannot exceed $250,000. Likewise, in actions asserting personal injury or bodily injury resulting from a construction defect in which damages for noneconomic or derivative noneconomic loss or injury are awarded, those damages cannot exceed $250,000.

Controversy has surrounded CDARA since its enactment and it has been amended several times. In 2024, members of the Colorado General Assembly proposed three different bills amending CDARA. Legislators killed all three bills. However, additional efforts to amend CDARA are anticipated in the next Legislative Session. Read more about the 2024 proposed changes here: Condominium Construction and the Construction Defect Action Reform Act.

SOURCES

[1] See Colo. Rev. Stat. §§13-20-802.5(5), 13-20-803.5.

[2] See Colo. Rev. Stat. 13-20-803.5

[3] See C.R.S. §13-80-104.

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